Hewlett says every company has its traditions, and at Hewlett-Packard these became known as “The HP Way.” In describing some of these “traditions” he starts with a brief review of the background of the company from which the traditions of the HP Way were founded.

“It’s important to realize,” he says, “that both Dave Packard and I were products of the Depression. When he graduated in 1934 Dave was one of the few people in our class to get a job offer. I took two graduate years and then came back to build medical equipment for a doctor. Terman realized that Dave and I would each go our independent ways unless he took some steps which he encouraged us to do. He arranged for Packard to come out to Stanford on a fellowship program that did not jeopardize his position at GE. This was in the fall of 1938.”

By January, 1939, Packard and Hewlett had decided to try to make a go of it and start a partnership, but they had no idea what they were going to do. Hewlett says they “started with about $500 worth of capital and set up shop in a one-car garage where Dave and his wife, Lucile, were living. Shortly thereafter, I was married and as both our wives had jobs at Stanford, they supported us until, by a sneaky move, they arranged to have children.”

“In the early days,” Hewlett says, “Dave and I did everything – kept the books, swept the floors, designed and manufactured various specialty products – anything that would bring in money. We built a clock drive for a telescope at Mount Hamilton. We made a shocking machine for a promoter that was thought to make people lose weight, and almost accidentally, took an idea that came from my thesis at Stanford on a piece of electronic measurement equipment called an audio oscillator.”

They sent out flyers to various university engineering departments and, much to their surprise, kept getting back orders. “One day,” Hewlett says, “we had a request from Walt Disney Studios. The engineer there wanted us to build eight of these products with a different set of electrical specifications….This was our largest order to date.”

Hewlett had a reserve commission in the Army and was called to active duty in the fall of 1941. By that time they had 17 employees and had set up shop in two small buildings near the corner of El Camino and Page Mill Road in Palo Alto. During the war the company built test and measurement equipment for the electronic industry, and grew to 250 employees.

After the war, Hewlett returned, but business had fallen greatly, and employment was down to about 80 people. “It was a critical time,” he says, “and we had to decide whether we were going to cut back and be a small company or whether the prospect was bright, keep the same corporate structure, and hope to move on. Fortunately, we chose the latter course.”

Talking again about the development of The HP Way, Hewlett says, “When we started the company we wanted to observe two principles. One, we did not want to borrow our capital, and two, we did not want to run a ‘hire and fire’ operation….We didn’t want that kind of a company. We wanted a company that was built around people.”

“In the early days there was very little to separate the owners from the workers. We were a single team and as we worked with our employees, we had an opportunity to observe what their lives were like and what the company meant to them.”

During this time they also decided to establish a form of a production bonus. “We chose a very simple formula that about 30% of gross income would be paid to our employees. This was pro-rated as a percentage of their base salary so that everyone from the top to the bottom (ourselves excluded) received the same percentage bonus….As the company grew in size…the earlier, primitive bonus plan was not effective and we agreed to save 12 % of our pre-tax earnings under a current cash bonus, paid on a percentage of base salary and a 10% contribution to the employee on a preferred [deferred?] basis.”

Hewlett tells of an employee who contracted tuberculosis and had to leave work for some two years. He says “Rather that let the full impact of this fall on his family, we decided that we would share an amount equivalent to what he would have earned, plus something to carry the medical expenses. After this experience, we decided we needed to formalize the process and so we were one of the first people to take out catastrophic medical insurance.”

“One of the first things we did was to say there will be no time clocks to punch. That was a statement that ‘we trust you.’ Later on, borrowed from experience in our German plant, we set up a program for flexible time of arrival. That means an employee can arrive anywhere from 6:00AM to 9:00AM, provided he works the full 8 hours. [It became a two hour window, 6:30AM to 8:30AM in most plants.]

“Another hangover from the early days was the open door policy. That said that anyone who had a grievance had a right to come in and see Dave or me. Admittedly, there was a certain screening involved in this, but if the individual had a good cause, Dave and I certainly saw them. This is a tricky road to follow because you have to be careful not to undercut management’s decisions.”

“Another technique that we used to democratize the company was the program of ‘communication lunches.’ Dave and I would visit a plant and say that we would like to have lunch with 15 or 20 of the employees from below the supervisorial level. The purpose of this was two-fold – one, to find out what your employees really thought, and two, [to see if] your ideas were really getting down to them.”

Hewlett says his definition of the HP Way would be “that it was to recognize the status of the average person. Dave shows it a little differently but says the same thing – to observe the golden rule – to do unto others as you would have them do unto us.”

“Over the years, these traditions have become the very part and fabric of the company. At awards luncheons, I would very often say that the continuance of the HP Way is dependent upon the old-time employee. He says how it works and explains to new employees what it’s all about. These are programs that are very hard to legislate from the top. They must be endemic in an organization.”

“We had one interesting, although unfortunate, example of this earlier in the month. One of our sales employees was murdered in Baltimore and when the news of this spread, there was an outswelling of support and comfort to the widow and four children. A program was set up to provide a fund for the education of these children, and in the first week, roughly $75,000 had been collected, to say nothing of notes of sympathy and understanding to the widow and her family. This is a program that was not sponsored by top management but from the ranks of the company, which is a true indication of the HP Way at work.”

Box 3, Folder 55 – General Speeches

October 19, 1992 – Meeting of American Institute of Physics, Palo Alto, CA

10/19/92, Page of notes handwritten by Hewlett

In his notes Hewlett states that it is not a coincidence that two papers are being presented by HP people.

He says the American Institute is an important organization with over 100,000 members, that can help solve some of the world’s problems “such as global warming, the ozone hole, as well as many aspects of pollution control.” He stressed the importance of science education.

10/19/92, Copy of typed list of attendees at meeting

7/15/92, Note from Barry Bronson to Bill Hewlett saying HP will be hosting the annual meeting of the AIP, 150-200 attending from around the US. Asks Hewlett if he would open the meeting with a 5 minute welcome.

Several AIP publications/pamphlets

10/28/92, Letter to Hewlett from Kenneth Ford, AIP, saying the meeting at HP was “one of the finest such meetings” they have had. They particularly appreciated the outstanding arrangements.

11/3/92, Copy of a letter to Kenneth Ford from Hewlett thanking him for his “gracious” letter.

10/16/92, Copy of a letter to Hewlett from Bill Shreve giving some background on the AIP along with some suggestions on topics he might mention

10/30/92, Copy of a letter to Hewlett from William R. Shreve, HP Labs, thanking him for his opening remarks

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